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Jefferson County, AL declares largest municipal bankruptcy in history.


County collapses under the weight of Birmingham. One thing the press is not mentioning is the racial makeup of the county. Birmingham is one of America’s blackest cities. The county is 42% black.

From SFGate.com…

Jefferson County, Alabama, declared the largest municipal bankruptcy in U.S. history, capping a more than three-year saga that turned it into one of the biggest casualties of Wall Street’s credit crisis.

The move yesterday by Alabama’s most-populous county came after state lawmakers failed to back a September agreement with creditors led by JPMorgan Chase & Co. that would have reduced its sewer-system debt of more than $3 billion. Governor Robert Bentley and local leaders worked unsuccessfully for two months to rally support for the deal, which fell apart anyway.

“We’ve reached that last resort,” Commissioner Joe Knight said yesterday at the meeting before the 4-1 bankruptcy vote. “We could continue and keep kicking this can down the road, but I think the people of Jefferson County have had enough.”

The Chapter 9 filing leaves creditors including JPMorgan, the biggest U.S. bank by assets, facing hundreds of millions of dollars in losses and may revive concern that defaults may rise in the $2.9 trillion municipal bond market. The move also leaves residents of the county that’s home to Birmingham, Alabama’s largest city, facing uncertainty over how much they may have to spend on sewage fees to repay the debt that led to the debacle.